dominate SL fuel market?
By Akhry Ameer
Indian companies could dominate Sri Lanka's domestic petroleum market
soon as efforts get underway to find a third market player after
the Ceylon Petroleum Corporation (Ceypetco) and the Indian Oil Corporation
reports reaching Colombo, the Indian state-run Oil and Natural Gas
Corporation (ONGC) plans to follow the footsteps of IOC in bidding
for the third slot in the local petroleum market. Two other Indian
corporations, Hindustan Petroleum Corp Ltd and Bharat Petroleum
Corp Ltd, all of which have excess capacity and coastal refineries
in the South of India, are also said to be interested in Sri Lanka.
So far only
Caltex Lubricants Lanka Ltd (Caltex), the local subsidiary of the
multinational conglomerate, has expressed interest but it is also
worried about some issues relating to access for the third player.
The Public Enterprise
and Reform Commission (PERC) last week finally called for expressions
of interest from international petroleum companies to take over
100 Ceypetco fuel stations out of 200. Already 100 other stations
are run by IOC while Ceypetco will retain the balance 100.
Oil major Caltex,
which earlier openly expressed interest in entering a liberalized
market, said it is worried about mixed signals received in the market
place. "We have a lot of concerns about the latest developments.
The EOI (Expressions of Interest) have been called for and we are
evaluating the opportunity in dialogue with our regional office
in Singapore. The information given is inadequate, as we do not
know the value of assets, the framework, etc. We are also gathering
information from our stakeholders," said Kishu Gomes, Managing
Director, Caltex Lanka.
Shell Gas Lanka corporate communications manager, Steven Bartholomeusz,
said the company was interested in being the third player.
But, he added,
given their mixed experience in the LPG industry they would like
to see better commitment from the authorities in terms of stable
rules and regulations. "There is a need for transparency and
a level playing field."
One of the issues
is that while Caltex has a monopoly in the lubricants market through
fuel stations, the IOC is exercising its authority in holding separate
discussions with private dealers. Of the total 1,100 odd petrol
stations in Sri Lanka 350 are run by private dealers.
IOC is reportedly
negotiating to buy some of these private stations. IOC officials
were not immediately available for comment. Caltex said that 100
of the most profitable stations at strategic locations of the 750
stations run by Ceypetco have been given to the IOC. As such, a
third player has to choose stations from the balance. Therefore,
allowing the company a free run of the private dealers before the
entry of the third player clearly creates an unfair opportunity.
that his company made several representations to the authorities
on this issue but to no avail. He was of the view that if the market
conditions are properly laid out there is potential for the local
market to develop.
Of the Indian
companies looking at Sri Lanka, ONGC has already secured licenses
to set up 1,100 petrol stations in India. ONGC's interest in Sri
Lanka lies in the fact that like many other Indian refineries it
has surplus capacity to export after supplying at home. "It
makes a lot of business sense. We are setting up petrol stations
afresh in India and here (in Sri Lanka) is an opportunity to acquire
ready infrastructure," a company official was quoted as saying
in Indian news reports.
Other oil majors
present in Sri Lanka were not available for comment as to whether
they would make a pitch for the third slot in the petroleum market.
The third entrant together with Ceypetco and IOC will also acquire
one third of the ownership in associated storage, transportation
and related infrastructure that has so far been operated solely
by Ceypetco. Earlier this month Ceypetco unfolded its new livery
to reflect the new tri-partnership operation that would form the
new face of the local domestic petroleum market.